Digit – a San Francisco-based startup that helps consumers save their money a little more efficiently – has only been around for a month, but it is starting to create a stir among potential consumers and investors.
Digit connects to consumers’ banks accounts (with permission of course) and begins gradually funneling money into a non-interest-bearing savings account. The service knows how much to take by using algorithms to track users’ spending habits. One the app has a fairly good idea of how users spend, it begins migrating money that they might not have saved if left to their own devices (but that won’t put consumers at risk of overdrafts and fees).
“No one likes to save — it’s a painful process… But everyone likes savings,” noted General Catalyst managing director Hemant Taneja, according to TechCrunch. General Catalyst led Digit’s latest $11.3 million funding round – with participation from existing investors Baseline Ventures and Google Ventures, as well as former Visa President Hans Morris. This brings the firm’s total fundraising to $13.8 million, TechCrunch said.
The funding follows Digit’s public release after a very extensive beta test. Since hitting the market, Digit has grown rapidly, with its user base increasing by 10x and its savings under management up 5x.
According to CEO Ethan Bloch, users are mostly coming to the service by word of mouth and referrals.
And, even better, those users are interacting with the system in the way Digit would want. Only about a quarter of users have ever withdrawn funds that Digit has set aside for them while another 25 percent have actually started setting aside more money when prompted to do so via one of Digit’s SMS messages.
Digit has not gone mobile just yet – instead, its website is pretty stripped down and it does most of its communicating with customers via good, old-fashioned SMS text messages.
Going forward, Digit is looking to expand its services and features pool. That could include adding interest to its saving accounts (in a compliant manner, of course).
While it plans to continue offering the same sort of simplified communications interface, Digit sees itself expanding its services and features to offer new options to users, or adding overdraft protection to its suite of offerings. But the ultimate goal would be for Digit to automate all your financial needs, from bill paying, to lowering debt, to saving for retirement.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More